KSEF, or the National e-Invoicing System, is currently one of the most frequently discussed topics regarding legal changes related to conducting business activities in Poland. A unified government system for sending, storing, and receiving invoices poses a challenge not only in terms of the development and efficiency of IT infrastructure but also in the areas of legal, tax, and accounting issues.
Learn what KSeF is and what challenges it brings to entrepreneurs.
What is the National e-Invoice System (KSeF) about?
KSeF is a nationwide, public IT system enabling businesses to issue, share, store, and receive invoices in a structured form. The main goal of this project is to integrate and centralize the circulation of these documents in economic transactions. The process involves transferring structured invoices in XML format to a government repository. There, the documents are verified for logical consistency, and the issuer receives a confirmation back. The invoice recipient can access it through proper authentication or by providing selected invoice-related data. It is worth noting that, based on the authorization system, various authorized entities, including accounting offices, can participate in this scheme in cooperation with a specific company.
It is also worth mentioning that KSeF, thanks to its integration capabilities with sales, accounting, and commercial document management systems, opens up new possibilities for automating a significant portion of business processes. However, on the other hand, this tool depends on internet access for invoicing capabilities and often requires the implementation of new IT solutions. This, in turn, entails financial investments in purchasing and implementing the appropriate software, as well as revising internal processes within the company.
KSeF – since when does it apply and what does it cover
The Ministry of Finance allows entrepreneurs to voluntarily use the KSeF platform from January 2022 until June 2024. According to current plans, starting from July 1, 2024, this system is intended to become mandatory for all VAT-registered entrepreneurs, and from January 1, 2025, also for entities exempt from VAT (both subjectively and objectively).
The next issue concerns what data will be sent to KSeF. Obligatorily, only invoices issued by entrepreneurs to other entrepreneurs should be transmitted to this repository. Exempt from this obligation will be invoices for retail customers, as well as invoices issued under the OSS procedure.
It should also be emphasized that some categories of documents will disappear from circulation, such as duplicates, which – due to storing invoices in the electronic repository – entrepreneurs will no longer need to issue. Another change will concern the way the invoice issuance date is determined. It is worth knowing that only the invoice that has been transmitted to the Central Invoice Repository (KSeF) will be considered as issued, and confirmation of this is the receipt of the Unique Invoice Identifier (UPO). In practice, merely generating a document in an invoicing program will not be synonymous with its issuance. New obligations are also expected regarding making payments for invoices, as the KSeF number allowing for document identification should appear in the payment title. However, it can be expected that, alongside this number, the actual invoice number will still be used for payment identification.
As a result of the above assumptions – if the planned implementation date of the Central Invoice Repository (KSeF) is maintained – it will almost completely eliminate paper invoices from circulation. Consequently, for VAT-exempt taxpayers – even though the obligation has been postponed for them by six months – the decision to opt for this form of invoice exchange with counterparts may prove beneficial. This will result not only from the logistics of delivering documents to counterparts but also from aligning with standardized document circulation standards.
KSeF in practice – registration process and sanctions for failure to fulfill obligations
An aspect that should be familiarized with well in advance is how to register for KSeF. However, the obligations associated with this may vary depending on the legal form of the enterprise and the currently used methods of document authentication.
In the case of a sole proprietorship, as a rule, such an entrepreneur does not need to make additional notifications. It is sufficient to log in to the platform using a qualified electronic signature or authenticate using the ePUAP profile. There may be exceptions to this rule, such as the need to grant access to other individuals. In such a situation, a notification form ZAW-FA should be submitted to the relevant Tax Office.
Another issue concerns taxpayers who are not natural persons, such as limited liability companies. In such cases, without additional notification, KSeF can be used by authenticating with an electronic seal containing the Tax Identification Number (NIP) based on the original ownership rights. However, if the entity does not have such a seal, it will be necessary to submit a notification form ZAW-FA, indicating the natural person authorized to log in to the portal.
The use of the KSeF portal itself, on the other hand, is exceptionally simple, as it involves:
- selecting the login context on the website https://ksef.mf.gov.pl/web/login by using the Tax Identification Number (NIP) or internal identifier;
- authenticating with the appropriate certificate (qualified electronic signature or electronic qualified seal) or through ePUAP, either by login and password or through online banking.
The next topic to address is the potential sanctions related to the introduction of KSeF. Currently, in the Polish legal system, there are various misdemeanors or criminal fiscal offenses related to invoicing and documenting sales. Examples of sanctions for non-compliance in this area include penalties for failure to issue an invoice or for issuing an inaccurate invoice, as provided for in the Fiscal Penal Code, which will remain in force even after the introduction of the new invoice circulation system. However, it is worth noting that under Article 106ni(1) of the Value Added Tax Act – a provision that will come into force on January 1, 2025 – new types of sanctions will also be introduced. If a taxpayer fails to comply with the obligation to:
- does not issue an invoice using KSeF;
- during a malfunction or unavailability of KSeF, or if the taxpayer, without the possibility of issuing a structured invoice for another reason, issued an invoice not compliant with the applicable template;
- fails to transmit the invoice within the required deadline;
-The head of the Tax Office shall impose on the taxpayer, by decision, a monetary penalty amounting to 100% of the tax amount shown on the invoice or 18.7% of the invoice value if the tax was not indicated on it. The taxpayer will be required to settle this penalty without a demand within 14 days from the date of delivery of the decision.
It is also important to mention the increased risk of errors when issuing invoices and the limited possibilities of correcting mistakes. For example, if the issuer of the invoice mistakenly enters the tax identification number (or if the purchaser provides it incorrectly), the sales document will not reach the recipient. Consequently, one can expect a significantly higher number of corrective invoices being issued.
Another significant aspect of these changes is the much easier verification by the National Tax Administration authorities of the expenses incurred by the entrepreneur, and consequently, what they include in the deductible costs. Previously, such information could only be obtained by these authorities during inspections or audits. As a result, KSeF will become an extremely advanced tool in the hands of the NTA, enabling much more efficient detection of potential irregularities.
KSeF – a few conclusions for the entrepreneur
Summarizing, it’s worth specifying a few conclusions related to the planned mandatory implementation of KSeF in Poland. Starting with general observations, it should be noted that this system represents another stage in the digitization of the record-keeping, documentation, and reporting of events in the economic sphere, following the introduction of uniform Control Files or the Cash Registers Online system. Certainly, it can serve as a means to tighten the tax system while being a very useful tool in the hands of tax control authorities.
It should also be emphasized that structuring invoices and introducing a central repository brings several benefits for entrepreneurs, including:
- standardized invoice transmission standards,
- reduced risk of document loss or omission in records,
- easier communication between entrepreneurs,
- simplification of accounting processes;
- reduction in the amount of paper documentation in the company;
- simultaneous access to invoice data from almost anywhere with internet access.
On the other hand, such a system is associated with a number of challenges and barriers, including:
- Technological limitations, especially among small businesses;
- Dependency on network infrastructure;
- Costs associated with implementing IT solutions to automate processes;
- The need to revise and reorganize some business processes, especially in larger enterprises;
- Inability to correct errors, particularly in the case of incorrectly provided Tax Identification Number (NIP), resulting in more corrections and the risk of potential sanctions due to mistakes made by invoicing personnel;
- Dependency of business processes on the efficiency of public IT infrastructure.
As a result, KSeF can be seen as a tool that carries enormous potential benefits. However, it is important how it will be implemented and how the National Tax Administration authorities will use it. If it is primarily used as another tool for controlling entrepreneurs, it is likely to be met with significant mistrust, making conducting business activities in Poland increasingly difficult. A proper approach from public authorities, as well as effective management of this system in the face of ongoing technological changes, can ensure that the benefits of implementing such a solution are noticeable for both entrepreneurs and tax administration authorities.